Quick answer
Yes, on a clear morning it's the single best sunrise in Portugal. You're at 1,818 m above a sea of cloud, with Pico Ruivo lit pink behind you. But it only works in clear conditions; in cloud you see nothing. Check the live mountain webcam before you set the alarm.
Context
Pico do Arieiro is Madeira's third-highest peak and the only summit reachable by paved road, which makes it the default sunrise spot. From the car park it's a 200 m walk to the viewpoint, no hiking required.
Drive up the ER202 from Funchal, 45 minutes in the dark, leaving roughly 90 minutes before sunrise. The road has hairpins but is in good condition. Bring a fleece even in summer: temperatures up there can be 10 °C colder than at sea level.
If you continue from Arieiro along the PR1 trail to Pico Ruivo, you get a 7 km hike across the spine of the island, one of Europe's great ridge walks. It takes about 3.5 hours one way (official IFCN figure), a few sections are vertigo-exposed, and since the 2026 reopening it is one-way past Miradouro da Pedra Rija: you finish at Pico Ruivo and walk out to Achada do Teixeira, so book a slot on SIMplifica and arrange transport back before you set off.